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Wednesday, January 23, 2008

The Song Remains the Same

Hauntingly Familiar
Here we are once again, suddenly embroiled amid a frenzy of financial crisis, and looming bail-out interventions.

The jury is still out as to whether or not this crisis will turn out to be “the big one” that will take down the entire house of cards.

Inevitably, the day will come when no form of economic stimulus or monetary policy interventions will be sufficient enough to provide remedy to the decades of sub-standard stewardship rendered by our elected officials.

Until such a day of reckoning arrives, we can not discount the possibility that the present cast of self-perceived masters-of-the-universe and their monopoly stronghold, which is rapidly fracturing, will prevail once again.

Following this week’s short-term trading summary, we will provide a brief, big-picture overview of the broad market indices to see just how vulnerable they have become in the last three months.

Maintaining Resolve
Another such song that remains the same is the one we sing daily while interpreting the price-action landscape from a short-term trader’s perspective.

Our analysis is purely a function of price-action, which in turn is continually reconciled against our longer-term wave counts and view of overall market structures.

Our proprietary work graphically deciphers the dynamic price-action landscape as it unfolds. We carefully draft the analysis to be free of bias, highlighting most, if not all of the pending and active trade-triggers telegraphed within a given price series.

Short-Term Trading Summary: Week ending 18-Jan.
From a counter-trend rally standpoint – though we continue to anticipate and prepare for one, as of last week - no low was low enough from which to launch a sustainable counter-trend rally.

Coming into last week on the short-side with two successive sell-triggers, a pair of intervening stabs at a tradable low failed miserably.

Shortly thereafter, we were back on the right side of things with another sell-trigger elected on Wednesday.

Thursday provided additional justification to probe for a low. Following a modest rally attempt at the open on Friday, this effort also ended up failing.

Friday’s failed rally-attempt allowed us a rare second chance to enter a previously triggered short-trade (circled) which we failed to identify in our prior days report.

All said and done, we took over 580 points from the Dow by week’s end.

THE BROAD MARKET UPDATE (BIG-PICTURE)
On a grand-scale, major equity indices have breached key-minor support levels in recent weeks. They are fast approaching a time frame in which a swift and forceful recovery must get underway in order to re-claim and salvage their fractured minor-degree up-trends.

Failure to do so in a timely fashion, accompanied by an acceleration of losses, risks engendering widespread recognition that a longer-term “trend change” to the downside has embedded itself in the minds of the majority of participants both large and small.

The Near Term Outlook covers the short-term Dow, S&P, and NDX five-days-per-week, and issues near-term updates for the Dollar, Gold, Crude Oil, and the HUI two times per week.